The united states economic system characteristics

The US economy is the largest and most technologically advanced in the world, according to the CIA World Factbook as of March 2011. The country's gross domestic product is $ 14.7 trillion, almost $ 5 trillion over China's economy US $ 280 billion below the GDP of the European Union. The economic system of the US it falls within the free market capitalism, led by individual initiative and self-marketing in pursuit of profit.

The real economy of "free market"

Companies in the United States are more flexible when making decisions to increase their profits, compared with the advanced capitalist economies of Western Europe. The regulations on commercial and labor law makes it easier for American companies to expand their activities and laying off employees as a means to cut costs. However, the lack of strict regulations means a domestic investment easier, which means that foreign companies can enter the US market more easily than the way US companies entering foreign markets.

Overall Importance

In addition to the large size of the US economy, which, according to the CIA World Fact Book, accounting for nearly 20 percent of world GDP, US companies are also leaders in technology products and services. Microsoft, Apple and Intel are just some examples of US dominance in the global technology market. For example, Microsoft's earnings in 2010 were $ 18 billion.

Interest rates

As it stated before, a basic feature of the US economy It is free enterprise. However, investments are expensive and few companies can spend large amounts of money waiting for their future benefit. Thus, borrowing from banks, which then must be returned with interest, it is common for companies. Low interest rates mean lower borrowing costs, making investments and market expenditure easier. The US economy It has a history of low interest rates, rising primarily during economic downturns, as in 2008 and 2009.

International Trade

The United States imports large quantities of agricultural and industrial products as well as energy resources (oil), for which domestic production is insufficient to meet the needs of the American people. International trade has been a vital element of the US economy, especially in the period after World War II. However, imports now exceed exports, resulting in a trade deficit of US $ 495.7 billion in 2010.